Karina chernikova. x5. crm

Х5 Retail GroupLoyalty Programs
Karina Chernikova
Marketing Director
June 3, 2010.

Disclaimer
This presentation does not constitute or form part of and should not be construed as an advertisement of securities, an offer or invitation to sell or issue or the solicitation of an offer to buy or acquire or subscribe for securities of X5 Retail Group N.V. or any of its subsidiaries or any depositary receipts representing such securities in any jurisdiction or an invitation or inducement to engage in investment activity in relation thereto. In particular, this presentation does not constitute an advertisement or an offer of securities in the Russian Federation.
No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.
No representation, warranty or undertaking, express or implied, is given by or on behalf of X5 Retail Group N.V. or any of its directors, officers, employees, shareholders, affiliates, advisers, representatives or any other person as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein or any other material discussed at the presentation. Neither X5 Retail Group N.V. nor any of its directors, officers, employees, shareholders, affiliates, advisors, representatives or any other person shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or any other material discussed at the presentation or their contents or otherwise arising in connection with the presentation.
This presentation includes statements that are, or may be deemed to be, “forward-looking statements”, with respect to the financial condition, results, operations and businesses of X5 Retail Group N.V. These forward-looking statements can be identified by the fact that they do not only relate to historical or current events. Forward-looking statements often use words such as” anticipate”, “target”, “expect”, “estimate”, “intend”, “expected”, “plan”, “goal” believe”, or other words of similar meaning.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, a number of which are beyond X5 Retail Group N.V’s control. As a result, X5 Retail Group N.V’s actual future results may differ materially from the plans, goals and expectations set out in these forward-looking statements. X5 Retail Group N.V. assumes no responsibility to update any of the forward looking statements contained in this presentation.
This presentation is not for distribution in, nor does it constitute an offer of securities for sale, or the solicitation of an offer to subscribe for securities in Australia, Canada, Japan or in any jurisdiction where such distribution, offer or solicitation is unlawful. Neither the presentation nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions, or distributed, directly or indirectly, in the United States of America, its territories or possessions or to, or viewed by any U.S. person as defined in Regulation S under the US Securities Act 1933 (the "Securities Act”). Any failure to comply with these restrictions may constitute a violation of United States, Australian, Canadian or Japanese securities laws. The distribution of this presentation in certain jurisdictions may be restricted by law and persons into whose possession this document or any other document or other information referred to herein comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities law of any such jurisdiction.
For Russian law purposes, the securities mentioned in this presentation (the "Securities") represent foreign securities. It is not permitted to place or publicly circulate the Securities on the territory of the Russian Federation at present. No prospectus for the issue of the Securities has been or is intended to be registered with the Federal Service for Financial Markets of the Russian Federation. The information provided in this presentation is not intended to advertise or facilitate the offer of the Securities in the territory of the Russian Federation. This presentation does not represent an offer to acquire the Securities or an invitation to make offers to acquire the Securities.
The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice. Some of the information is still in draft form and neither X5 Retail Group N.V. nor any other party is under any duty to update or inform recipients of this presentation of any changes to such information or opinions. In particular, it should be noted that some of the financial information relating to X5 Retail Group N.V. and its subsidiaries contained in this document has not been audited and in some cases is based on management information and estimates.
Neither X5 Retail Group N.V. nor any of its agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the statements contained in this presentation.

Information about the Company
X5 Retail Group N.V.
Russia's largest retailer in terms of sales.
May 2006 The Company was created as a result of a merger between Pyaterochka (soft discounter chain) and Perekrestok (supermarket chain).
June 2008 X5 acquired Karusel hypermarket chain and substantially strengthened its position in hypermarket format.
As at 31 March 2010, X5 had 1,399 Company-managed stores located in Moscow, St. Petersburg and other regions of European Russia, Urals and Ukraine, including:
1,063 soft discounters
60 hypermarkets
276 supermarkets

X5 Retail Group Today
X5 Retail Group N.V.in 2009
Nearly 1 billion Customer Visits
USD 8.7 billion in Net Sales
25% Pro-Forma Sales Growth in RUR
33% Consolidated Sales Growth in RUR
Industry-leading LFL Sales Growth of 10%

Structure of the Loyalty Programs ofХ5 Retail Group
The objective is to gather the customer information:
Stable competitiveness
to obtain the detailed statistics, which will allow to increase the forecasting and planning accuracy, and as a result to improve the operational efficiency
to investigate deeply the customer insight and to become customer-oriented
Prepared to launch
Magic card
Club Perekrestok
Club Perekrestok Green
Personalized accumulative bonus loyalty programs.
Promotional cards
Allow to collect points for purchasing the PROMO-goods
Being considered

Value Proposition of the Formats,
Operating the Loyalty Programs
THE STRATEGY OF MULTI-FORMAT DEVELOPMENT AND FORMAT DEFERINCIATION:
Business model
Traffic generation
Basket generation
Price leader image
Basket generation
Attraction and retention of the Target Audience
Front margin control («to gain on the assortment»)
EBITDA cow
Value proposition
All in one place – in low cost – for the whole family
FRESH LEADER
Best-in-service
Purchasing in the atmosphere of celebration
Focus on the local surroundings
KARUSEL – is the best hypermarket chain for the wide range of customers focused on family values - makes the positive mood available for everybody by offering:
Wide and deep NON FOOD assortment, focus on interesting and profitable seasonal offers
Wide range of fresh food and prepared meals
Wide range of healthy lifestyle goods, focus on NON FOOD
Wide and deep range of goods for children (FOOD, NON-FOOD)
Additional services in and outdoor – the number of tenants, with the business matching the target audience of the hypermarket
Achieved by the means of:
Purchasing power ofX5 Retail Group
Constant investigation of the current demand and the future needs of the target audience. Fast reaction to market changes
Implementing the best world practices in food retail
PEREKRESTOK – is the federal supermarket chain for the people who appreciate the quality of food, comfort and their personal time. The leader in providing FRESH food of the highest quality at the best price among the supermarkets. Grants the high quality of service and the best conditions for the comfortable and fast purchasing not far from home/ on the way. Means to grant the above:
Customer oriented personal
Assortment policy based on the investigation of the current demand and future needs of the target audience. Fast reaction to market changes
Implementing the innovative technologies and the best world practices in food retail
Best store location
Loyalty programs can stimulate

ValueProposition& the Loyalty Programs
Value proposition SUPERMARKETS
Value proposition
HYPERMARKETS
Positioning
Magic card
Club Perekrestok
Positioning of the program aimed to create the atmosphere of the family holiday. Positioning is reflected in all promotional materials of the program and the marketing campaigns
Positioning of the program as a Club for the people who appreciate the quality of food, comfort and their personal time. The partners of the program are the businesses with the same target audience
Program rules
TO JOIN THE PROGRAM:
The customer can pay the entrance fee – 49 RURsince 1st July 2010
Making the purchase for more than the campaign limit (vary by region)
Only by paying the entrance fee – 199 RUR
MAIN BONUS RULE:
2 bonusesfor every full 10 RUR, spent with the Perekrestok Club Card
+4 bonuses for every full 10 RUR, for the purchase made on Birthday
1 bonus for every full 10 RUR, spent with the Magic Card
+1 bonus for every full 10 RUR, for the purchase made on weekdays (Monday-Thursday), except holidays;
+ 3 bonuses for every full 10 RURof the purchased non-food goods
+ 4 bonuses for every full 10 RUR, for the purchase made on Birthday and 2 days before and after the birth date
ADDITIONAL BONUS RULES:
+1bonus for every full 10 RUR, with every increase of the receipt value for 1000 RUR (works for the receipts value 2000-9000 RUR)
additional bonuses (+0.5 bonus, +1 bonus, +2 bonuses, +4 bonuses) if the threshold limit of the aggregate turnover for the 3 months is reached (threshold limits: 20000 RUR, 30000 RUR, 50000 RUR, 100000 RUR)
СПИСАНИЕ БАЛЛОВ ПО ПРАВИЛУ:
1 bonus for every 0.1 RUR of the purchase paid with the bonuses

Value proposition
HYPERMARKETS
Positioning
Different basic rule due to the different margin
Magic card
Club Perekrestok
Program rules
MAIN BONUS RULE:

Value proposition
HYPERMARKETS
Positioning
Magic card
Club Perekrestok
Progressive rule for every receipt as the frequency of purchases is more than once a week
Progressive rule for the aggregate turnover for the period, as the frequency of purchases is less than once a week
Program rules
MAIN BONUS RULE:

Value proposition
HYPERMARKETS
Positioning
Different Birthday rules due to the different frequency of purchasing
Magic card
Club Perekrestok
Program rules
MAIN BONUS RULE:

Value proposition
HYPERMARKETS
Positioning
Additional stimulation of the purchases on weekdays for the flattening of the traffic fluctuation during the week
Magic card
Club Perekrestok
Program rules
MAIN BONUS RULE:

Value proposition
HYPERMARKETS
Positioning
Magic card
Club Perekrestok
Additional stimulation of the assortment categories defined as strategic
Program rules
MAIN BONUS RULE:

Plans to develop the Perekrestok Club:
Theme Sub-clubs
Prepared to launch
In each Theme Sub-club there are extra-bonus rules for the selected range of goods for the subscribers of the sub-club. The selected theme range of goods is being revised once a month
The participant of the Perekrestok Club can subscribe to the first Theme sub-club on his own choice free of charge. To subscribe to the each subsequent sub-club the participant will be charged 5000 bonuses.
The most active subscribers of the sub-club can become the moderators of this sub-club. For the moderation job the participants earns extra bonuses
Mediterranean Club
The sub club for the participants fond of Italian cuisine. The promoted categories: olives and olive oil, balsamaceous, pastas, rice, Italian salads, wine, cheese (e.g. Parmigiano, Gorgonzola, Mozzarella)and meat delicacies (e.g. Pepperoni, Parma ham), vegetables (most typical for Italy: tomatoes, eggplants, zucchinis, etc.), fish and seafood, etc.
French Riviera
The sub club for the participants fond of French cuisine. The promoted categories:wine,champagne, french dressings, chocolates and other deserts, croissants, cheeses, pates, duck, fish, typical meat: veal and lamb, typical vegetables (potatoes, asparagus, artichokes, carrots, beans, truffles, cauliflower) etc.
Bavarian
The sub club for the participants fond of bear and meat.The promoted categories: bear, sausages and frankfurters, gourmet snacks, cabbage, typical meat (e.g. gubernaculum) etc.
Healthy Eating
The promoted categories: breakfast cereals, juices, salads, vegetables, fruit, any other goods, positioned as ecological or organic(e.g. «without soy») etc.
Healthy Eating
The promoted categories:caviar, vodka,gourmet snacks,pelmeni, Russian pancakes, etc

Geographical Presence
In Moscow and suburbs the program was launches in 2006г.
Rest of the regions were launched in 2009.
The program is launched in all regions in April 2010.
Volgo-Vyatsky
18 Perekrestok stores
6 Karusel stores
North - West
17 Karusel stores
Center
14 Karusel stores
Privolzhsky
6 Karusel stores
Centralno-Chernozemny
6 Karusel stores
Urals
3 Karusel stores
South
4 Karusel stores
Sredne-Volzhsky
5 Karusel stores
As for the 30 of April 2010

Main efficiency indicators
of the Perekrestok Club
More than 1500 000of participants
Number of participants
growth for the last year
(30.04.09 – 30.04.10)
Redemption rate:87,6%
Operates in more than260 stores
The program basket exceeds the chain basket 68,9%
The share of the program in the chain turnover 33,9%
The share of the program in the traffic 20,1%
Since the launch of the program bonuses in the Perekrestok chain redeemed for the amount of
78,3%
663500 people
1 billionRUR

Main efficiency indicators
of the Magic Card
More than 320 000of participants
Operates in more than 61 stores
Redemption rate:N/A
(can not be calculated as the program is just launched )
The program basket exceeds the chain basket81%
The share of the program in the chain turnover 26%
The share of the program in the traffic 14%

Development Plans

X5 CLUB – stable technical infrastracture
X5 Loyalty Programs
will grow and develop
(technical aspects)
The program operates on the stable technical infrastructure:
On-line processing system from ComArch, which allows the store continuous detailed data about the participants’ purchasing activity since the launch of the program with the highest standards of data protection.
Contactor servicing hotlines of the programs – the Synterra company. One of the TOP 3 of the Russian market of contact centers. Licensed Operator of the personal data in accordance with the Federal Law 152 «About the Personal Data».
We have launched the project and now are tendering the contractor for CRM-analytical job. The CRM analytics will allow :
to apply the data driven segmentation of the customers;
to investigate the customer insights and to align the pricing, promotional and assortment strategy to the customer needs;
to use the gathered detailed statistics to improve the accuracy of forecasting and planning;
to use the possibilities of personalized marketing in full strength: apply the micro-segmentationfortargeted marketing campaigns, to use widely personalized communication channels, such as SMS, e-mailing, etc.

What’s next?
X5 Loyalty Programs
will grow and develop
In2010-2011 we aim to implement:
Bank co-brand project for both of the Loyalty programs, in order to give the customers the opportunity to use the card as a normal mean of payment: debit or credit
MVNO – Mobile Virtual Network Operator as a partner of the Loyalty Programs
Partnerships with other brands and chains to allow our participants to collect even more bonuses for any purchases
Corporate program for our partners
Charity cards in our Loyalty Programs, which will collect all the bonuses in in favor of charity programs «Karusel to the Children» and «Perekrestok of Life»
Internet-shop of the unique products, which will be available for the participants only if paid by bonuses

Bank co-brand
In the end of 2009 we’ve started the project with CITY-bank on the launching the co-brand program for our participants.
This will allow our Partners :
to expand the number of customers by attracting new customers from the partner
to increase the competitiveness of products and services by providing additional benefits for consumers
to achieve greater advertising effect by combing forces of brands, to attract more attention to advertising campaigns
to handle cross-marketing activities, joint actions
According to the available banking statistics in the world and Russia, the owners of co-branded cards rarely "leave" the bank, and keep more money on card accounts than other clients
Prepared to launch
Prepared to launch
Bonus
account
Bank
account
One card
0000 0000 0000 0000
All opportunities of X5 Loyalty Programs
Credit limits, deposit and other banking products on special conditionsExtra bonus points for purchases with the program card outside the chain, the removal of ATMs

MVNO
MVNO (MobileVirtualNetworkOperator) — a mobile operator , using thу existing technical infrastructure of the other operator, but selling the services under its’ own brand
X5 RETAIL GROUP is launching an additional service for it’s customers in July 2010 – MVNO «ALLO» on the technical basis of Mobile TeleSystems!
Advantages of the new service :
Low-cost mobile communication (the service is nearly 20% lower the market price )
Integration with the X5 Loyalty Programs, which allows to collect bonus bonus package of communications services: minutes ofvoice traffic and/or SMS messages free of charge for the purchases made in X5 chains
Special offers

MVNO
Partnership with suppliers
Partner of MVNO X5 «ALLO» – BRAND (supplier)
The size and duration of the service packages (minutes ofvoice traffic and/or SMS) are defined in the partnership agreement.
The possibility of selling service packages by suppliers, and partners of X5 :
Boosting sales of the specific brand or productby awarding the customers subscribed to «ALLO» with free service packages: minutesofvoice traffic and/or SMSfor the purchasing of the specific products / group of products
A significant discount on the price of the service packages can be offered to strategic and long-term Partners.
The benefits for Partner:
The most active audience in terms of promotions
The payment will be charged only for the service packages accrued to the subscribers
Synergy from the integration with the telecom projects
Practical and therefore actually an interesting incentive to buy goods for buyers
Measured results, reporting

Partner Programs from the customer point of view
*
51,9
Mobile operators
*
92,8 % of the Club Perekrestok participants would like to collect/redeem points in other companies.
44,9
Pharmacies
*
33,9
Clothes
*
32,9
Cinemas & Theatres
30,6
Gas stations
*
23,7
Active sports
22,4
Restaurants & cafes & clubs
21,5
Transport
0,2
Different
16,5
Intertainment
*
0,2
All of the above
14,1
Banking & Finanse
7,2
Nither
12,1
No answer
Romir, Marketing research among the Club Perekrestok partisipants
Being a Partner of the X5 Loyalty Programs, the company gets:
Ability to simultaneously attract a wide audience of payable customers
Increased frequency of visits by accelerating the accumulation of points from traffic-maker (retailer)
The constant presence of the brand in front of consumers (high frequency of card use in grocery retail chain)
Promotion of the opportunities and privileges in the partner companies through mass communication
Access to the aggregate information about his customers
Access to the analytical information about the purchasing activity of his customers
The possibility of customer segmentation, defining and researching the target audience and its preferences
The possibility to use the personalized communication channels, such as SMS, e-mail mailings, hotlines
The possibility of cross researching, cross and up selling
*Partnership agreements have been concluded

Partner Programs
X5 loyalty programs can offer 2 options of partnership:
Option 1
Full interaction of the X5 Loyalty Program and Partner
The Partner has his own Loyalty Program
The participants of the Partner's Loyalty Program can convert privileges (bonuses, points, miles, etc.) of one program to another with the defined exchange-rate
The Partners share information on participants who make exchange
The Partners make the transaction clearingat the end of the period and clarify the bills and payments
There is no need to integrate the POS equipment with multiple processing. Only the processing systems are integrated
Prepared to launch
Option 2
"Easy" Partnership with X5 Loyalty Program
The Partner issues the bonuses of X5 Loyalty Programs
Partner independently defines rules for calculating bonus points
In the end of the period, The Partner shall pay issued bonus points to X5 at the agreed cost per 1 bonus point
X5 provides aggregated information about the Partner’s Clients
The X5 handles the communications with participants on the Partner’s assignments
Online and off-line integration of technical systems is acceptable

Examples of the existing Partner Programs
Partnership with
the SELA clothing store
Federal
Any customer of the SELA store collect 5 bonuses for 10 RUR spent in SELA with the Perekrestok Club card.
Travel Agency
"Favorable tour"
Volgo-Vyatsky branch
Discount on any tour for the Club Perekrestok participants.
Discount is grantedin bonuses
The chain of the ticket offices
«Theater – Show»
Sredne-Volzhsky branch
Buying the tickets at the Theatre-Show ticket office the participant of the Perekrestok Club collect 1 point for every 10 RUR .
Travel Agency
“Vivat"
North-West branch
Discount on any tour for the Club Perekrestok participants
Discount is granted in bonuses.
Franchising chain
«Perekrestok-Express»
Federal
Purchasing in the franchising stores the participant collects the same bonuses as in the regular Perekrestok store.
No redemption of the bonuses available
Internet-shops BOLERO & 003.ru
Federal
1 bonus for every 1 RUR spent on books and media products in the store Bolero.
1 point for every 5 RUR spent on electronics and home appliances in the store 003.ru

Partner of the Loyalty Program – BRAND (supplier)
The benefits for Partner:
Stimulation of the sales by providing additional discounts in points on the Partner’s products
Opportunity to attract attention to the Partner’s product through all channels of communication available in X5 Loyalty Programs :
The partnership agreement is signed with the brand. The price, size and the validity of the additional discount (in bonuses) for the customers is defined in the supplementary agreement. The partner pays only the bonuses issued to the participants
The discount can be applied :
to all products of the BRAND
only to the defined range of products
The discount can be valid for:
full year
half year
quarter of the year
one or several month
combined program
The size of the discount can vary:
2%...100%
The discount can be granted :
only in X5 chain(s)
both, in X5 and among the Partners
(the additional tools for accounting of goods purchased by participants are required)
WEB и
PERSONAL WEB-PAGE
www.x5club.ru
X5 Loyalty Programs Audience
HOTLINE
8-800-200-95-55
8-800-200-56-66
SMS–SERVICE
Targeted
SMS-mailings
INDOOR EDVERTISING
Posters, stoppers,
leaflets, etc.
ADDITIONAL SLIP
AT THE POS
Info-slip with each transaction
IN-PACK:Perekrestok Club Card or Magic Card as "a gift" for the purchase of the products of the Partner.

Examples of the edvertising
Info-slip
at POS
Stoppers, rubricators, etc.
Special display of goodsin the salerooms
Posters in the salerooms
Information in the PROMO-catalogue
Information on the
web-page
SMS mailings
Leaflets

Loyalty programs for Corporate clients
Corporate Card is intended only for corporate clients and partners of X5 Retail Group
Corporate cards differ from standard cards:
The Corporate Card gives the unique conditions of obtaining benefits /
discounts to its owners:
The possibility to increase the discount depending on the turnover
Additional bonuses on the Company’s Birthday are possible
Additional bonuses on the Company’s professional holiday are possible
Additional bonuses for the range of goods, if the company is a supplier of the X5 Retail Group
The card can be of a unique design or just branded with the Partner’s logo
The amount of discount (number of points) can increase monthly depending on the average and total turnover on the pool of cards
Basic levelCorporation:twice more bonuses(2% offthe purchase price)
Available within first 2 months if the card were pre-filled with more than 10 000 points
After the first 2 months if the average turnover on the pool of cards is more than 3,500 RUR per month
If the average turnover on the pool of cards is less than 3,500 RUR a month, all the cards are transferred into a standard mode of accumulation of points, according to the rules of the program
Middle levelCorporationmid: 5 times more bonuses (5% off the purchase price)
If the average turnover on the pool of cards is not less than 3,500 RUR per month
The total turnover on the pool of cards exceeds 15 million RUR per month
Higher middle levelCorporation mid+: 7 times more bonuses(7%off the purchase price)
Premium levelCorporation top: 10 times more bonuses(10% off the purchase price)
&
&
&

Charity Cards
X5 Loyalty Programs support for charity programs of a chains
The holders of "charity" loyalty cards, can collect bonuses without redemption opportunities. All the collected bonuses are automatically transferred in favor of the charity programs «Perekrestokof Life» and «Karusel for Children».

Thank you for your attention

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